In this series (see Part 1 if you missed it) we explore how customers’ use of their banking apps will decrease and their desires to have transactional information injected into richer platforms more integrated into their daily activities. In this second and last part, we explore how the proliferation of aggregated, open banking fuelled experiences will allow customers to open accounts and meet more needs without ever engaging a bank’s sales channel.
Do I need a bank app to meet new financial needs?
In 2020, retail sales went up 57% from 2019 and the accelerated growth of sales for powerhouses like Kogan, eBay and Amazon, saw an ever-increasing desire for consumers to be able to find what they want within marketplace digital platforms that offer a convenient balance of product choice, value and unbiased reviews. It was noted in Australia Post’s 2021 eCommerce report that beyond the Covid constraints of not being able to shop physically, “Australians also noted the financial benefits of online shopping, with 80% saying they can find better deals and save money.”
Covid has changed consumer behaviours and created a newfound sense of confidence and comfort in being able to find a good deal online. Whilst this maturity is strong in retail, how has it fared to finding a better deal for your banking activities?
According to Finder, 30% of customers use accounts from different banks to ensure their needs and sense of good value are met. With the advent of Consumer Data Right (CDR), this figure will grow exponentially.
Finder now even has their own mobile app offering which allows customers to see all of their accounts but also uses the power of aggregation to advise on the best deal for any new product. With their recent CDR accreditation, Finder is now in a position to ensure (like any good retail marketplace) that you can get the best deal on a product without actually needing to engage the brand or bank themselves.
Through CDR, customers will become their own financial brokers as they can easily open or apply for the best value product from a broad range of options - often without needing to go anywhere near the bank’s website. According to Finder’s CEO Chris Ellis, "Ultimately, CDR will enable us to alert members to better deals and facilitate switching in a very efficient and convenient way for the consumer."
This approach is standard today when it comes to new customer acquisition but do banks invest in the same activity to offer you an additional product at the best price via their mobile app “offers” page?
Be it a high interest savings account or a low-rate loan, customers will be more confident that in seekng a new bank product through an aggregator player, they will likely access a better or fairer offer. This often proves a challenge for customers of existing banks whereby offers are often favoured to new customers only; disservicing those customers who have been loyal for many years.
The other upper hand is that these new potential distribution models will benefit from a blanket of insights-driven marketing that will align customers with future needs. The platform model has been tried and proven with Amazon being able to offer rich targeting and marketing capability to increase conversion and return purchases for merchants of Amazon. Many banks will continue to invest in programs to better tie their customer data to transactional data. Whilst this will enable evolutional capability to better target their customers internally, it’s the players that expose these capabilities to platforms that are fast gaining customer trust due to their focus on objectivity and transparency offer the best deal.
With saturation in core banking functionality and the ever-expanding hunger for growth, banks will continue to face a challenge of acquiring and cross-selling to customers via a platform whose value proposition will start to diminish as fintech and alternative marketplace providers offer richer, fairer and more trusted platforms to meet new financial needs.
How will banks avoid being turned into value proposition wholesalers? Perhaps the question is what brands will challenge the status quo (and themselves) to capitalise and leverage popular distribution platforms to gain thin-sliced market share in such a fierce competitive landscape?
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.